The law today
NCG NO. 467 Financial Market Commission (Comisión para el Mercado Financiero) regulates the authorization process for the existence of special stock corporations, which states the following:
On March 31, 2022, General Rule No. 467 (the “NCG 467”) was issued, which regulates the authorization process for the existence of special corporations.
According to NCG 467, any entity required by law to request authorization of existence before the Commission, with the exception of banks, non-bank payment card issuing companies, payment card operating companies, companies administering clearing and settlement systems for financial instruments and insurance companies, must request its authorization of existence by one or more of the future partners of the company, who will be responsible for the accuracy and completeness of the information provided to the Commission.
Among the information required by NCG 467 are the following:
a) Digitalized copy of the public deed containing the bylaws of the future entity.
b) Regarding natural persons who directly or indirectly contribute 10% or more of the capital stock: full name, national identity card, passport or other official identification document, and indication of the total percentage of the capital that they will directly or indirectly own of the company.
c) Regarding the legal entities that directly participate in the incorporation of the company: (i) Identification: Company name, type of company, unique tax number and legal domicile; (ii) Identification of the legal representative: Full name and national identity card, passport or equivalent; (iii) Copy of the public deed of incorporation and certificate of good standing of the company and marginal annotations not older than 5 days, except in the case of companies created under the protection of Law No. 20. 659; and (iv) In the event that the powers of representation are not contained in the accompanying bylaws, a copy of the instrument conferring such powers must be attached.
f) Information on the persons who will be appointed as provisional or definitive directors of the corporation.
g)) Brief description of the company’s history.
h) Ownership structure of the corporate group to which the company will belong.
i) Summary of the strategic plan (mission, vision and objectives) and of the company’s business plan.
j) Background information that allows accrediting that the partners have the necessary liquid resources to comply with the capital contribution commitments.
k) Sworn statement by the person signing the application that the copies attached are a true reflection of the originals.
Then, NCG 467 states that after reviewing the background and correcting any observations made by the Commission, the resolution authorizing the existence of the entity and the issuance of the corresponding special certificate will be issued without any further procedure, upon payment of the corresponding fees for existence authorization.
Notwithstanding the foregoing, it is clarified that such authorization of existence does not enable the entity to start its operations or functions when this requires special authorization from the Commission.
Additionally, it regulates the situation in which the information referred to in letters a) to d) of the NCG is modified, indicating that the Commission must be notified of such event within 5 working days of its occurrence through the SEIL module. In the case of the information referred to in letter e), it must be communicated by the same means no later than the business day following the occurrence of the respective circumstance.
Finally, in order to comply with Article 126 of Law No. 18.046, the entity, as soon as it has made the registration in the Commercial Registry of the registered office and the corresponding publication in the Official Gazette, must communicate this fact to the Commission through the SEIL module, attaching a copy of the respective registration and publication.
NCG NO. 468 Financial Market Commission regulates the authorization process for the commencement of operations of general fund managers.
On March 31, 2022, the Financial Market Commission (“CMF” or “Commission”) issued General Rule No. 468 (the “NCG 468”) which regulates the authorization process for the start-up of general fund managers.
According to NCG 468, the authorization to start operations may be carried out together with the authorization of existence, or after such authorization has been granted, without the fund managers being able to start their operations, that is, to deposit the first internal regulations of any mutual or investment fund in the deposit maintained for such purpose by the Commission, without having been granted both the corresponding authorization of existence and the authorization to start operations by means of a founded resolution issued by the CMF.
The same regulation establishes the necessary requirements for the purposes of requesting the authorization to commence operations, and an application must be made together with the following documents:
a) Outline containing the estimated organizational and functional structure, with a brief description of the functions of each unit and identification of the Committees that will support the management of the manager and of the persons or units in charge of the risk management, internal audit and compliance functions.
b) Initial version of the Security and Information Management Policies.
c) Initial version of the Risk Management and Internal Control Manual.
d) Initial version of the Manual for the Prevention of Money Laundering, Bribery or Financing of Terrorism.
e) Document containing a brief general description of the main information or support systems for the relevant processes of the fund manager, with an indication of those for information security.
f) Initial version of the entity’s risk matrix, grouped according to the business cycles contemplated in Section III of Instruction No. 1,869 of 2008, with an indication of the probability of risk materialization and estimated impact before and after the strategic responses adopted by the entity.
g) Identification of the areas or services that the entity considers will be outsourced, indicating the counterparties, in the event that the respective contracts have been entered into, and the safeguards that will be adopted to ensure that such outsourcing does not affect the normal operation of the fund manager, the protection of client information and does not generate circumstances that may result in an inadequate resolution of conflicts of interest.
h) Initial version of the Business Continuity Plan, for which it is recommended to use the template and instructions for the preparation of plans for non-governmental entities of the Federal Emergency Management Agency of the United States Department of Homeland Security (FEMA), or the Methodology for the Preparation of the Operational Continuity Plan issued by the National Emergency Office of the Ministry of the Interior and Public Security (ONEMI).
Finally, the regulation states that once the background information has been reviewed and any observations made by the Commission have been corrected, the resolution authorizing the commencement of operations will be issued without further procedure, and from that moment on, the fund manager may begin to deposit regulations of the funds in the respective depository.
Amends Law No. 20.712, on the Administration of Third-Party Funds and Individual Portfolios, in relation to the destination of uncollected funds by the participants of mutual or investment funds, or by their assignees, for the benefit of the Chilean Fire Department. Law N° 21.433
On March 18, 2022, Law No. 21.433 (the “Law”) was published in the Official Gazette amending Law No. 20.712 on the Administration of Third-Party Funds and Individual Portfolios, in relation to the destination of monies not collected in a timely manner by the participants of mutual or investment funds, or by their beneficiaries, for the benefit of the Chilean Fire Department.
The Law includes two new articles:
1. Art. 38 bis, which establishes that the quotas of mutual or investment funds that have not been registered in the name of the respective heirs or legatees within 10 years from the death of the respective participant, will be redeemed by the fund administrator and must be delivered to the National Board of Fire Departments of Chile.
In order to comply with the above, the fund managers must inform the Financial Market Commission in March of each year, the date of death of the participants, the quotas redeemed, and the amounts delivered to the National Board of Firemen of Chile in the previous year.
The Law also adds that the provisions of this article shall also apply to those mutual or investment fund shares whose participants have died prior to the entry into force of the Law.
2. Art. 80 bis, which establishes that dividends and other benefits not collected by the respective participants within five years from the payment date determined by the respective investment fund manager must be delivered to the National Board of Firefighters of Chile.
It also adds that, in order to comply with the above, the fund manager must keep such resources in adjustable term deposits after one year has elapsed since the monies have not been collected by the respective participants. The fund managers must inform the Financial Market Commission, in March of each year, of the dividends and other cash benefits paid to the National Board of Firefighters of Chile, as well as an updated list of the dividends agreed to be paid to the participants with their respective dates and the amounts not collected in each fund at the end of the previous year.
Finally, the Law also adds that the provisions of Article 80 bis will also be applicable to those dividends and other cash benefits which payment dates established by the fund managers are prior to the entry into force of the Law.
Financial Market Commission issues Bulletin No. 2.297, which introduces a new Chapter 12-16 on the limit on loans granted to business groups.
On November 2 of this year, the Financial Market Commission approved the issuance of Bulletin No. 2.297, which provides new instructions to banks regarding the limit of credits granted to corporate groups referred to in paragraph seven of Article 84 N°1 of the General Banking Law that affect individual debtors and interbank credits, for the determination and control of which banking companies must observe the instructions contained in Chapter 12-3 of the Updated Compilation of Rules for Banks (“RAN”).
Through the aforementioned Bulletin, Chapter 12-16 was incorporated to the RAN, which establishes the scope and exceptions for the application of the credit limit to corporate groups, together with the way to form the lists of corporate groups, the entities that compose them and the way to compute the credits granted to entities belonging to the same corporate group, in order to determine their degree of credit concentration and compliance with the limit.
Furthermore, the above, a new file D60, called “Transactions with entities belonging to the same corporate group”, is incorporated to the Information System Manual, with which the audited entities will report monthly the information referred to the daily transactions carried out with entities belonging to the same corporate group. This in addition to identifying the groups to which they belong and the amounts owed. This new file must be sent from January 2022 onwards. In addition, the regulation considers a period of adaptation to the modification, by means of which, exceptionally, the sending of the files referring to the months of January to April 2022 will be made in June, together with the file corresponding to the month of May.
Law No. 21.374 Ministry of Finance Amends Law No. 20.712, on the Administration of Third Party Funds and Individual Portfolios, in relation to the destination of certain amounts of money for the benefit of Chilean Fire Departments.
On September 28, Law No. 21.374 (the “Law”) was published in the Official Gazette, which amends Law No. 20.712 on the administration of third party funds and individual portfolios, in relation to the destination of certain funds to the Chilean Fire Department.
The Law includes a new art. 26 bis, which establishes that the money of the funds (whether mutual or investment funds), not collected by the respective participants for a period of 5 years from the liquidation of the corresponding fund, must be delivered to the National Board of Firefighter Corps of Chile.
In addition, it adds that in order to comply with the above, the fund administrator must maintain such resources in time deposits with indexed interest rates after 1 year has elapsed since the funds have not been collected by the respective participants.
Finally, the Law also adds that the money corresponding to dividends, capital distributions and any other cash benefits that have not been collected by the respective participants of the funds liquidated more than 5 years after the entry into force of this law, may be delivered to the National Board of Firefighters of Chile, indicating the procedure for this purpose.
On July 19, 2021, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 457 (hereinafter, the “NCG”), which simplifies the issuance of publicly offered securities. The NCG amends General Rule No. 30 (hereinafter “NCG 30”) in order to facilitate the registration of issuers and public offering securities in the Securities Registry of the CMF; and General Rule No. 303 (hereinafter “NCG 303”) of the CMF, simplifying the content of applications for registration of securitization debt securities and their registration in the Securities Registry of the CMF.
1. Main amendments to NCG 30.
i. Regarding the information required from entities registered in the Securities Registry:
(a) The date of publication and disclosure of financial statements by issuers of securities must be disclosed at least 30 days in advance, through their website and through the CMF’s System for Sending Information Online (SEIL).
(b) Open stock corporations must publish the notice of shareholders’ meetings no less than 10 days in advance.
ii. The issuance of publicly offered securities is simplified:
(a) The requirement to send prospectuses prior to their disclosure is eliminated, notwithstanding that their format and content must conform to the minimums established by the CMF.
(b) The requirement to submit to the CMF the facsimiles of the materialized securities and the security certificate of the printing company, the contracts with the securities depository company in case of dematerialized securities, the background information evidencing the quality of the qualified experts and the mnemonic code of the security is eliminated.
(c) The obligation to submit the information required for the registration of public offering securities in duplicate is eliminated.
2. Main amendments to NCG 303.
Several modifications are introduced to the procedures to be followed by securitization companies for the issuance of securitized debt securities and their registration in the Securities Registry, in order to simplify them and homologate them to the bond registration process contained in NCG 30. To this effect, the content of the applications for registration of securitization debt securities is simplified, eliminating certain requirements and obligations.
3. Amendments to the Updated Compilation of Norms (RAN).
To this effect, it states that in order to register in the Securities Registry an issue of bonds other than subordinated and perpetual bonds, the entity must follow the procedure set forth in Section IV of NCG 30.
The provisions contained in the NCG became effective on July 19, 2021.
General Rule No. 452: exempts from the obligation to register certain public offerings of securities and amends General Rule No. 336 of 2012.
On February 22, 2021, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 452 (hereinafter, the “NCG 452”), which exempts certain public offerings of securities from the obligation to register the issuer or security and amends General Rule No. 336 of 2012 (hereinafter, the “NCG 336”). It also repeals General Rule No. 345 and paragraphs 1 and 2 of Circular No. 125.
The instructions established by virtue of NCG 452 will become effective as of the same date of the issuance of the rule.
1. Excepted public offerings
i. Those whose securities may only be acquired by qualified investors.
ii. Those made in national stock exchanges, provided that the total accumulated amount to be raised by the issuer or offeror in the 12 months following the first offer made in the stock exchange does not exceed the equivalent of 100,000 Unidades de Fomento, and that the offeror or the issuer complies with the information requirements that the respective stock exchange has established for the protection of investors in order to make the corresponding offer.
iii. Those that establish as a requirement to improve each operation, that the investor acquires at least 2% of the capital stock of the issuer of the securities.
iv. Those whose purpose is to compensate the employees of the issuer of the securities, or of its parent company, subsidiaries or affiliates, regardless of whether the offer relates to the shares of a collective investment vehicle whose main investment are instruments representing the capital of the former.
1. Those that deal with securities that confer to their purchasers the right to membership, use or enjoyment of the facilities or infrastructure of educational, sports or recreational establishments.
2. Amendments to NCG 336
The following amendments were made to NCG 336:
i. A new paragraph c) is added to number iii) of section I, indicating that public offerings of securities shall not constitute public offerings of securities that are directed to a maximum of 50 investors that do not have the status of Qualified Investor, as long as the copulative requirements of section I indicated in numbers i) and ii) are also met.
ii. The final paragraph of section I is modified in relation to the fact that securities offerings that deal with instruments whose unit value amounts to at least 3,000 Unidades de Fomento shall not be required to comply with the alternative requirements indicated in number iii) of section I of NCG 336.
iii. If the communication or material that is delivered to potential investors is in a language other than Spanish or English, the information must also be included in one of these two languages.
iv. Section IV, paragraph (a) is replaced, indicating that in order to verify the identity and quality of Qualified Investor of the persons indicated in letters (a) and (b) of paragraph (iii) of Section I of NCG 336, a declaration may be obtained from the person acquiring the securities offered, indicating what type of investor he/she is, that is, qualified from 1) to 6) of section II of General Standard No. 216 of 2008, 7) or 8) of the same standard, or that he/she is not a Qualified Investor, and the fact that he/she is aware that the securities to be acquired are not registered in the registers kept by the CMF.
3. Obligations to inform the public
– Those who make the offers indicated in number 1. above, must indicate, in the verbal, physical or electronic communication used to offer the securities, that the offer deals with securities not registered in the registers kept by the CMF and that, therefore, the offer may not be made to the public in Chile:
– No public offering can be made in Chile of such securities; and.
In the event that the issuer of the securities is not registered, such issuer will not be subject to the supervision of the CMF, nor will it be obliged to comply with the continuous information obligations required of registered issuers.
4. Information obligations to the CMF
The offerors of the respective securities must send to the CMF, 5 business days prior to the day on which the offer is intended to be made, the following information:
i. Identification of the Offeror.
ii. Identification of the Issuer of the Security.
iii. Identification of the entity for which the workers perform functions (if applicable).
iv. Type of offer to be made.
v. Total amount intended to be placed with the recipients of the offer, expressed in Chilean pesos as of the day prior to the day the information is sent.
vi. Percentage of the issuer’s capital (if applicable).
Additionally, the offeror must attach to this information a declaration of truthfulness of the same and of the fact that he/she will comply with the instructions given in these regulations.
General Rule No. 451: establishes characteristics or conditions to be complied with in order to register debt securities under the automatic registration modality.
On January 25, 2020, the Financial Market Commission (hereinafter, the “CMF”) published General Rule No. 451 (hereinafter, “NCG 451”), which establishes the conditions and procedure to be complied with to register debt securities (bonds, securitized bonds, convertible bonds, bills of exchange, and in general short or long term debt securities) under the automatic registration mode.
1. Conditions to register debt securities under the Automatic Registration modality.
Debt securities may be registered in the Securities Registry by means of the aforementioned modality, complying with the following conditions:
i. That the registration of the issuer in the Registry is in force on the day of the deposit of the issue whose registration is requested; and
ii. The registration of the issuer has been in force uninterruptedly during the 12 months prior to that date.
In the case of mutual funds and investment funds supervised by the CMF, it will be sufficient that at the time the application is made, it has the minimum net worth and number of participants required by Article 5 of Law 20,712.
Likewise, NCG 451 establishes that the automatic registration modality may not be used by issuers or administrators that, at the date of the application:
i. Have been charged with a possible violation of Article 65 of the Securities Market Law (hereinafter, the “LMV”), while the sanctioning procedure is pending resolution;
ii. That a sanctioning resolution has been issued by the CMF in accordance with the provisions of Article 65 of the LMV, unless three years or more have passed; or
iii. Those who have not yet sent their financial statements (in accordance with applicable regulations).
2. Procedure to be followed to make the registration:
Certain background information must be provided through the SEIL Module – Online Information Sending System – in accordance with the instructions contained in the Technical Sheet provided for such purposes on the CMF’s website.
Once the application for registration has been submitted, and after the applicant has made the corresponding declarations in accordance with the regulations issued by the CMF, the latter will proceed with the registration of the debt securities in the Securities Registry, issuing the corresponding certificate, after payment by the applicant of the registration fees.
The NCG 451 indicates that the instructions of this regulation are effective as of January 25, 2021. However, it adds that for those registration applications pending resolution by the CMF, the issuer must formally request the CMF to cancel them, and after the said request is accepted by means of an official letter from the CMF to that effect, the registration application must be reinstated.
Commission for the financial market gives instructions regarding the technological means authorized for the holding of board meetings.
On November 17, 2020, the Comisión para el Mercado Financiero (“CMF”) published the General Rule N°450 (“NCG 450”), which gives instructions regarding the technological means authorized to hold board meetings and revokes the circular N°1.530 of 2001 of the CMF. In this respect, NCG 450 mainly regulates the following aspects:
1. Authorized technological means: any system of bidirectional transmission and reception of sounds, images or information, which allows the interaction of the directors in real time, simultaneously and permanently.
2. Duties of the board of directors, the general manager and the company:
a) Companies must have at least one system that allows directors to exercise their right to attend board meetings remotely, which must be at no cost to them. For the purposes of the place where the meeting is held, the registered office is understood to be both the legal address of the company and the virtual one, composed of the different systems and means made available by the company.
b) The general manager or the secretary of the board of directors, if the function has been delegated to him, must communicate to each director, with due notice, the form and schedules in which the systems will be available, and must also provide them with the information and documentation that the directors need to deliberate and define the matters to be dealt with at the meeting.
c) It is the responsibility of the president, or whoever acts as president, and the secretary of the board of directors, to record in the minutes the certification of the following:
c.1. That the remote assistance system or systems are enabled, allowing all directors to attend and participate, as well as being connected during the entire session simultaneously and permanently; and
c.2. The identity of those who used such system(s) to participate in the session
d) The deliberations and agreements of each session must be recorded in minutes stored on physical or digital media, which guarantee their fidelity and integrity, and which must be signed (physically or by electronic signature) by all the directors who attended the session, by means of mechanisms that provide certainty regarding the authenticity of the signatures of those directors